Tuesday, December 13, 2016

South Korea in Shaky Transition

South Korea in shaky transition

Sometimes it happens fast. Other times it happens so fast no one saw it coming, and the only thing left to do is to wonder what just happened … and why. Such is the case of South Korean President Park Geun-Hye last Friday.

The move was largely unexpected, dropping the country into a hot cauldron of uncertainty even as it faces a sluggish economy at home and growing military threats from North Korea as well as growing economic threats from China abroad.

Ms. Park has favored “stick over carrot” diplomacy, taking a hard line with the North, supporting stronger sanctions against the hostile neighbors. Diplomatically, Park ruffled China’s considerable feathers when she allowed the U.S. to deploy a missile defense system in the country. It’s not really clear if these positions played the decisive role in her undoing.

One thing that is clear, public relations played a role. The narrative around Park was bad and getting worse. Her popularity was plummeting, replaced by what many reporters termed “intense unpopularity.” The catalyst there was a massive scandal over political influence trading that hit the headlines back in October.

For some time, the jury was out on whether or not Park could weather that storm. Some predicted the scandal would make it easier for a more liberal candidate to win next time, but no one was seriously calling for metaphorical heads to roll back then.

But the narrative held on and began to gain traction, steam, and staying power. Eventually, it became bigger than Park, as more and more South Koreans began to see the scandal as emblematic of something larger and far more insidious – rampant government corruption.

Increasingly, Ms. Park began to not only be seen as a symptom of that corruption but as a symbol of that corruption. Once that image set in, it proved impossible for her to shake. Now, Prime Minister Hwang Kyo-Ahn will step into the role of acting president. Right out of the gate Mr. Hwang promised “retaliation” if the North tried anything during the transfer of power.

Hwang also doubled down on sanctions and pressure on North Korea as part of an international effort to push North Korea into giving up its attempts to develop and deploy nuclear weapons.

That very similar message may well be the narrative those in his party wish Hwang to stick to, but its similarity to the disgraced Ms. Park could prove muddy enough to dirty up any chance of Hwang’s to distance himself from the scandals. South Koreans may decide one politician is as bad as another, tarring him with the same brush … unless he does something quickly to establish his own credibility.

David Milberg is a financial analyst in NYC.

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